The prevailing line about Joe Biden this primary cycle has been that he is a milquetoast centrist, a moderate who would do little to ruffle up the status quo. Much column space has been dedicated to Biden’s supposed centrism, and Rep. Alexandria Ocasio-Cortez, D-N.Y., has even said that she and Biden should not be in the same party.
There may be truth to that statement, but it says far more about Ocasio-Cortez than it does about the former vice president, who has staked out a tax policy vision that puts him well to the left of former President Barack Obama.
The Penn-Wharton Budget Model score of Biden’s tax plan shows that it would raise taxes by $2.3-$2.6 trillion over the next 10 years. His campaign’s estimate is that his tax plan would raise $3.2 trillion. Taxpayers at every income level will be hit by his litany of tax hikes, with at least 93% of each income group above the bottom 20% seeing a tax increase.
President Obama had kept the Bush tax cuts in place for 97% of taxpayers making $500,000 to $1 million in 2012. He also proposed a $500 tax credit for two-earner families, tripling the child tax credit (and raising the income levels that are eligible for the credit) and doubling the earned income tax credit.
Similar proposals, different circumstances
Both have been in favor of raising capital gains taxes, but Obama likely only would have raised the top capital gains and dividends rate from the current 23.8% to 28%. Biden, on the other hand, proposes treating capital gains income as ordinary income, with a top rate of 39.6%.
Biden and his former boss diverge sharply on corporate income taxes, as well. While both have proposed a 28% rate, the status quo is very different — President Obama proposed this as a cut when the rate was 35%, whereas Biden proposes a hike from the current rate of 21%.
Biden also proposes a “minimum book tax” that would target corporations he claims are avoiding taxes by using loopholes in the IRS code. This isn’t accurate — the deductions being claimed are commonly used deductions that enjoy bipartisan support, such as the research and development tax credit and allowing offsets for operating losses in prior years. But that hasn’t stopped Biden from proposing a $212 billion corporate tax hike. Obama proposed nothing of the sort.
Biden further breaks with Obama on financial transaction taxes. The Obama administration, particularly Treasury Secretary Timothy Geithner, remained opposed to financial transaction taxes throughout the two terms, despite support for the idea in other areas of his party. Biden, on the other hand, has bluntly stated, “We should have a financial transaction tax.”
Of course, Biden’s plan does overlap in some areas with Obama’s. Both, for example, propose ending the so-called stepped-up basis, which allows heirs to pay capital gains taxes based on an asset’s price when inherited rather than when the original owner acquired it.
Biden wants to go much further than Obama ever did
But even this also illustrates a departure between the two — Obama proposed this as part of a proposal to exempt up to $100,000 in capital gains for individuals (double for couples), as well as an exemption of $250,000 for personal residences (again, double for couples). A substantial tax hike was paired with a substantial cut.
The “centrist” label, however, has been applied to Biden on taxes largely because of his lack of support for a wealth tax. Yet opposing a 6-8% wealth tax does not a centrist make.
Wealth taxes have gone out of fashion in other Organization for Economic Cooperation and Development countries, because they are inefficient and raise little revenue. Where 14 OECD countries once had a wealth tax in place going back over two decades, today that number has shrunk to just three comparable to what Sens. Bernie Sanders and Elisabeth Warren have proposed.
Those three countries that do levy a tax on net wealth rarely approach the rates in Warren‘s and Sanders‘ plans. Norway’s wealth tax maxes out at 0.15% at the national level, Spain’s goes no higher than 2.5% (depending on the municipality) and Switzerland’s is levied at the state level, where rates vary greatly. In other words, Biden isn’t a centrist — Warren and Sanders are just extreme.
Hey, Elizabeth Warren:Your wealth tax plan? It’s unconstitutional.
The idea that Biden is a moderate or centrist is yet another indication of the outsize influence that Twitter has on media members’ conception of the Overton window. He is well to the left of Obama on tax policy, and the presence of even further-left candidates in the primary does not change that fact.
Andrew Wilford is a policy analyst with the National Taxpayers Union Foundation. Follow him on Twitter: @PolicyWilford